Weighing the Odds: 12 Things for Whole Foods to Consider in Detroit

The news that natural foods giant Whole Foods is sniffing around for real estate in Midtown Detroit has created a buzz among foodies who have long rued food deserts and the lack of high-quality grocery stores in the city. But is the store really such a slam dunk?

If the store actually opens — and I hate to second-guess Mayor Dave Bing, who reportedly said the store is “not a question of ‘if’ but ‘when'” — it could be a very big win for the struggling city, and especially for efforts to grow a stronger 24-hour community in Midtown. I can definitely see how a gleaming, bustling Whole Foods market, brightening a formerly forlorn stretch of Woodward Avenue, could aid efforts to attract new residents.

But inspired partly by a conversation with Dominique King of the Midwest Guest blog, my brain has been overloaded with confusion, skepticism and sometimes conflicting observations about this news. So I’ll try to empty it all out here by listing the factors working both for and against a Whole Foods Detroit.

Not Gonna Happen

Whole Foods has a well-earned reputation as a progressive company that embraces organic food, offers good wages and benefits, strives to be a good corporate citizen and occasionally takes risks in locating new stores. But it’s still a publicly traded company that has to answer to shareholders. How do you suppose investors and the Whole Foods board will react to the idea of opening in Detroit? “Sure, the city has lost almost a quarter of a million people in 10 years, blah blah blah. But trust us; it’s a home run!”

The demographics pose a serious challenge. Simply put, Detroit is a poor city with small pockets of relative affluence. A few years ago, the owner of an established Midtown bar I know was talking about opening a gourmet grocery store and told me he was consulting with a high-end grocer based in the suburbs. He abruptly dropped the idea after running the numbers. “It won’t work,” he shrugged.

Crime is a big issue. Many people say it’s a big reason why large grocery chains haven’t invested in the city.

The recent track record for high-end markets in Detroit isn’t good. Zaccaro’s Market, a small, gourmet grocer in Midtown, and Mercury Coffee Bar, a few miles south in Corktown, both closed after short runs in 2009. Both were criticized for being priced beyond the surrounding neighborhoods. “Whole Paycheck,” anyone?

A Whole Foods in Detroit might need to rely on suburbanites who work in the city for a chunk of revenue. I know from first-hand experience that while a lot of people commute home to the suburbs along Woodward Avenue, many times more high-tail it out using the freeways. Would a Midtown location lure non-residents when there are already stores in Troy, Rochester Hills and West Bloomfield?

Build That Puppy!

Midtown is an up-and-coming neighborhood that benefits from some relatively stable residential areas, the presence of Wayne State University and several other large employers. The neighborhood has been the recipient of billions of dollars in redevelopment investment in recent years and has held its own during the recession.

The area is home to an aggressive community-development strategy. Wayne State, Henry Ford Health System and the Detroit Medical Center have offered $1.2 million in incentives to employees to encourage them to buy or rent homes in Midtown. Mayor Bing has offered incentives to persuade Detroit police officers to move into nearby neighborhoods. And the University Cultural Center Association is juggling a variety of initiatives to revitalize the area.

While the economics are a challenge (see above), Whole Foods has the scale and financial resources to make a concerted go of it in Detroit. The company would certainly be in a stronger position to weather a slow start than the independently owned businesses listed above.

Other grocers, such as Honey Bee Market La Colmena, have shown that high-quality markets that emphasize fresh meats and produce and quality niche goods can succeed in Detroit — at the right price.

If it plays its cards right, Whole Foods could capitalize on Detroit’s nascent urban farming movement and nearby organic farms. That could give a huge lift to small farmers, who would have the world’s largest organic grocer selling their food. The presence of a localized supply chain might even help lower the store’s costs during the growing season. But most importantly for Whole Foods, it’s the kind of good PR money can’t buy.

A new Whole Foods could help solve the chicken-or-egg problem and give fence-sitters a stronger reason to move into the city, helping to grow the neighborhood and begetting more customers for the store.

Conclusion

If Whole Foods does indeed pull the trigger, my guess is that Detroit will end up with a scaled-back version of its typical store template. If you’ve ever been to Whole Foods’ Taj Mahal-esque store on Washtenaw Avenue in Ann Arbor, adjust your expectations downward.

That’s not to say Detroit couldn’t have a nice, inviting store. I’m sure it would be all of that and more. But if I’m in charge, I’m keeping a close eye on managing inventory and minimizing unused overhead, at least at first.

I’d thought about Whole Foods’ notoriously high price points and the short-lived run of Zaccaro’s as well, but I still saw a glimmer of hope for the idea of a WF in Midtown in the wake of the incentives program.
The whole chicken-and-egg issue is a tough one as well. I’ve heard of folks who would like to move to Detroit, but the lack of things like decent retail and schools discourages them from doing so. At the same time, retailers and schools have a hard time making a commitment to Detroit when there don’t believe there are enough residents to support them.
I’ve see some hope there, though…including most recently spotting new housing construction on Cass, just south of Marwil’s, near Wayne State.
You idea for a scaled-back version of a WF store sounds like a reasonable one to me.

Thanks for the comment, midwestguest.
There is definitely a lot of development activity in Midtown, both residential and commercial, and that can only help. And Whole Foods isn’t the only retailer thinking of taking a risk there, either. But I think they’re really going to have to be careful and do their homework before making the decision.
That said, there’s a recently cleared lot at the corner of Woodward and Warren where crews just knocked down some old buildings. This would be a great, high-traffic corner for them to open on, right by Wayne State, the DIA, the Detroit Historical Museum, etc.
That reminds me of one thing I forgot to mention: it’s not as though major retailers have completely shunned Midtown. Barnes & Noble operates a student bookstore on Warren on the Wayne State campus.

This is a pretty good rundown. I tend to think that #2 is pretty much the major factor. Whole Foods is expensive enough that people just won’t be able to afford it, and I’m not sure there’s a large enough base of professionals to justify the store. I think we will get a smaller store, simply because I can’t think of too many places in Midtown where WF could conceivably locate. My bet is on the area east of Woodward and around I-94, maybe across from TechTown and near the new Amtrak station.

I wouldn’t count out people who are against the WF store locating in Detroit as well. Their CEO, John Mackey, has some pretty anti-progressive views.

Ultimately, though, it’s difficult to believe that this idea would be publicly floated if it wasn’t going to happen eventually. Bing’s development style seems to be more on the cautious side.

About a decade ago I did a story for a local publication that looked at the early efforts of Wayne State to start building up the area around their Midtown campus (actually, I don’t think it was even called Midtown then, but that’s beside the point) into more of a 24-hour community. They were in the process of declaring eminent domain against some private business owners so that they could build their new student welcome center at Warren and Woodward avenues. I recall a quote from one of the neighborhood experts that I interviewed that the area arguably contained the largest concentrated work force in all of the Detroit area, what with Wayne State, Henry Ford, the DMC, Detroit Public Schools administration, CCS and the various cultural institutions all located within a few blocks (today, you could add TechTown and CCS’ new Argonaut Building campus to that mix). So I actually think the professional mix is there, particularly if you add in all the people who work downtown, just a few miles south.

I agree with you that Bing doesn’t seem like the type of mayor to overpromise something like this.

The tagline from this year’s best ad has a spirit that almost demands Whole Foods move ahead: “This is the Motor City, and this is what we do.”

Detroit is one of America’s original can-do cities. Build the Whole Foods, bring on the high-end food and give residents access to the same choices that most of the rest of the country has. People will come.

It’s important to think of Detroit as a city in transition, not decline.

And that’s more than spin . . . Detroit’s urban farms need another outlet for their locally-grown produce!

NGH:
1) “Detroit” is not the market. The market is whoever would buy groceries at the location. It’s target consumer is not in EEV or Mexicantown. WF has better metrics than the entire city and it’s population. Lazy.
2) Demographics matter, yes. Detroit is a city of 750,000. You need a smaller % of that to make a viable store as compared to the % of residents in the suburbs. It’s not about %s, it’s about sales, which is what Detroit’s population has in spades (it is still bigger, no?) over the suburbs. If WF had no control over where they were to locate, but were assigned a lot at random, this would be relevant. But I’m pretty sure they get to pick the “small pocket[] of relative affluence,” so the non-affluent areas don’t matter.
3) L.A.Z.Y.
4) WF has a brand name. Neither Zaccaro’s nor Mercury offered this. And comparing a coffee bar to a full service grocer is confusing to say the least.
5) Just poses a question with no reason to conclude it’s negative. Could have been rephrased and put under the reasons to build: “Thousands of suburban residents commute home along Woodward, or could commute home along Woodward. The opportunity to pick up a few items for dinner would add to the location’s customer base.”

BTP:
1) But I thought you said there was no market because everyone was poor? If you pose contradictory assertions, you should directly weigh them.
2) Contradicts #7. *IF* there is a chicken/egg problem, only one can come first (otherwise there is no problem). So are the people coming or is the store coming, or are they coming in tandem, in which case the people arguably came first because the plan came first.
3) We’ve now gone from economically impossible, to economically viable, to economically unlikely, to able to weather unlikely to reach probable.
4) So is the track record good (Honey Bee) or bad (Zaccaro’s)? You can’t take both sides.
5) This should probably have a cite to any chain selling ultra-small scale produce. Because the idea of a chain is its scale allowing for efficiency.
6) This is a customer base point again.
7) See #2.

“But if I’m in charge, I’m keeping a close eye on managing inventory and minimizing unused overhead, at least at first.” The implied straw-man manager who doesn’t manage inventory and is wasteful with overhead is very angry.

You can present two sides to a story, but you can’t write one side pretending the other side didn’t just happen. Take on the issue, WF isn’t the only entity allowed to weigh the costs and benefits (which you cop out of with the “If it happens”).

First of all, thanks for reading and compiling your thoughts here. But secondly, don’t call me lazy and I won’t call you a troll.

I’m definitely all in favor of Whole Foods opening its doors in Detroit and would definitely become a regular customer. But I’m also pretty skeptical, so I’m trying to lay out the factors that work for against it happening, and I base those factors on a blend of personal observation about the neighborhood and city as a whole, keeping up to date on news about the city and my past experience as a reporter writing about many of these issues. If I missed something, or you disagree with my analysis, that’s fine. But let’s keep it respectful.

As much as many people WANT a whole foods, I suspect the store will be a
disaster. The suburban grocery store makes its money on soccer moms
with families. Single folks with their $50 weekly purchases don’t stack
up to us breeders with our $300 plus tallies. Sure, you might buy a
chicken breast at the hot bar, but my household doesn’t stop eating
until two whole chickens are put away and my kids are still young.

I’ve
seen the demographic data as well, Midtown has an income/acre of $275k,
but I live near the Troy Whole Foods and I suspect that the income per
acre around here is north of a $1M. Also, the whole foods is only
attractive to the wealthiest people. It is super-expensive!

I
know people don’t like to bash Detroit, but I think a large group of
people have their political correct hats on right now. The problem is,
these same people won’t open their wallets after the store opens. I
think that Whole Foods will pull out after about 2 years and the store
will never, ever make a profit.